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Englobal Corp (ENG) SEC Filing 10-Q Quarterly Report for the period ending Saturday, September 25, 2021

Englobal Corp

CIK: 933738 Ticker: ENG

 

EXHIBIT 99.1

 

ENG Announces Third Quarter 2021 Financial Results

 

HOUSTON, TX, November 4, 2021 -- ENG (NASDAQ:ENG)

, a leading provider of innovative, project delivery solutions for the energy industry, today announced that, for the third quarter ended September 25, 2021, it reported net income of $2,401,000, or $.07 per share, on revenue of $5,921,000, compared with a net loss of $1,110,000, or $(.04) per share, on revenue of $15,729,000 for the third quarter ended September 26, 2020.

 

ENG’s $3.5 million improvement in third quarter bottom line performance compared to the same period last year was primarily the result of a Q3 2021 Other Income contribution of $6.4 million, consisting of a $5.0 million forgiveness of the company’s PPP loan obtained in April 2020 and a $1.4 million employee retention credit. Both of these items were used to cover payroll costs in order to maintain our essential workforce. The credits were partially offset by Q3 2021 decreases in revenue and gross margin, in addition to increased business development costs within the company’s Commercial segment, compared to Q3 last year.

 

The $9.8 million decrease in the company's third quarter revenue -- and $23.5 million decrease in nine-month revenue -- compared with the same periods last year were due primarily to the COVID-19-related non-renewal of several large commercial segment projects, as well as ongoing delays in certain government services projects due to COVID-19-related base closures and travel restrictions. These factors were partially offset by revenue contributed by one large project that did continue into the third quarter of 2021.

 

For the nine months ended September 25, 2021, the company had a net loss of $1,809,000, or $(.06) per share, on revenue of $29,449,000, compared with net income of $59,000, or $.00 per share, on revenue of $52,871,000 for the nine months ended September 26, 2020.

 

ENG’s $1.9 million decrease in nine month bottom line performance compared with the same period in 2020 was primarily a result of decreases in revenue and gross margin, in addition to increased business development costs and bad debt reserve within the company’s Commercial segment. These factors were partially offset by employee retention credits in the first and third quarters of 2021 and the PPP loan forgiveness.

 

"While it’s clear that ENG's business in the third quarter of 2021 was still being adversely affected by the lingering disruption of the energy industry from the effects of COVID-19,” said ENG CEO Mark A. Hess, “ENG is strongly positioned today to take advantage of the anticipated increase in business activity in our markets. First, we have recently added on-site construction to our suite of client services, a move we are confident will attract additional business that is expected to boost our revenue and earnings starting in this current quarter.

 

 
1

 

 

“Second, earlier this week we announced our partnering with a leading university to build a prototype CO2 sequestration reactor intended to capture the carbon dioxide formed during power generation and other industrial processes and storing it so that it is not released into the atmosphere. This project potentially provides us with yet another source of near and long-term revenue growth.

 

“Third, thanks to our recent stock offerings we have a strong balance sheet with nearly $25 million cash on hand and less than $1.4 million in long-term debt. This financial stability not only gives our current and prospective clients added comfort, but also provides ENG with far greater ability to execute on many of the opportunities before us, including those in the expanding renewables and green energy sectors.

 

"These opportunities, plus the continued energy industry recovery from the COVID pandemic, will, we believe, produce improved results for our company for the remainder of this year and into 2022," Mr. Hess concluded.

 

The following is a summary of the income statements for the three- and nine-month periods ended September 25, 2021 and September 26, 2020:

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 25,

2021

 

 

September 26,

2020

 

 

September 25,

2021

 

 

September 26,

2020

 

Revenue

 

$ 5,921

 

 

$ 15,729

 

 

$ 29,449

 

 

$ 52,871

 

Gross profit (loss)

 

 

(814 )

 

 

1,144

 

 

 

272

 

 

 

6,857

 

Selling, general and administrative expenses

 

 

3,089

 

 

 

2,174

 

 

 

9,914

 

 

 

6,621

 

Operating profit (loss)

 

 

(3,903 )

 

 

(1,030 )

 

 

(9,642 )

 

 

236

 

Net income (loss)

 

 

2,401

 

 

 

(1,110 )

 

 

(1,809 )

 

 

59

 

 

The following table illustrates the composition of the company's revenue and profitability for its operations for the three- and nine-month periods ended September 25, 2021 and September 26, 2020:

 

 

 

Three Months Ended

 

 

Three Months Ended

 

(amounts in thousands)

 

September 25,

2021

 

 

September 26,

2020

 

Segment

 

Total Revenue

 

 

% of Total Revenue

 

 

Gross Profit (Loss) Margin

 

 

Operating Loss Margin

 

 

Total Revenue

 

 

% of Total Revenue

 

 

Gross Profit Margin

 

 

Operating Profit (Loss) Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$ 3,935

 

 

 

66.5 %

 

 

(27.7 )%

 

 

(66.7 )%

 

$ 13,867

 

 

 

88.2 %

 

 

7.1 %

 

 

1.1 %

Government Services

 

 

1,986

 

 

 

33.5 %

 

 

13.8 %

 

 

(0.3 )%

 

 

1,862

 

 

 

11.8 %

 

 

8.5 %

 

 

(0.3 )%

Consolidated

 

 

5,921

 

 

 

100.0 %

 

 

(13.7 )%

 

 

(65.9 )%

 

 

15,729

 

 

 

100.0 %

 

 

7.3 %

 

 

(6.5 )%

 

 
2

 

 

 

 

Nine Months Ended

 

 

Nine Months Ended

 

(amounts in thousands)

 

September 25,

2021

 

 

September 26,

2020

 

Segment

 

Total Revenue

 

 

% of Total Revenue

 

 

Gross Profit (Loss) Margin

 

 

Operating Profit (Loss) Margin

 

 

Total Revenue

 

 

% of Total Revenue

 

 

Gross Profit Margin

 

 

Operating Profit Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

$ 23,141

 

 

 

78.6 %

 

 

(1.6 )%

 

 

(26.0 )%

 

$ 45,180

 

 

 

85.5 %

 

 

12.7 %

 

 

7.2 %

Government Services

 

 

6,308

 

 

 

21.4 %

 

 

10.3 %

 

 

(0.5 )%

 

 

7,691

 

 

 

14.5 %

 

 

14.5 %

 

 

8.2 %

Consolidated

 

 

29,449

 

 

 

100.0 %

 

 

0.9 %

 

 

(32.7 )%

 

 

52,871

 

 

 

100.0 %

 

 

13.0 %

 

 

0.4 %

 

The following table presents certain balance sheet items as of September 25, 2021 and December 26, 2020:

 

(amounts in thousands)

 

As of

September 25,

2021

 

 

As of

December 26,

2020

 

Cash

 

$ 24,699

 

 

$ 13,706

 

Working capital

 

 

30,980

 

 

 

14,039

 

 

 
3

 

  

ENGlobal Corporation

Condensed Consolidated Statements of Operations

(Unaudited)

(amounts in thousands, except per share data)

 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

September 25,

2021

 

 

September 26,

2020

 

 

September 25,

2021

 

 

September 26,

2020

 

Operating revenues

 

$ 5,921

 

 

$ 15,729

 

 

$ 29,449

 

 

$ 52,871

 

Operating costs

 

 

6,735

 

 

 

14,585

 

 

 

29,177

 

 

 

46,014

 

Gross profit

 

 

(814 )

 

 

1,144

 

 

 

272

 

 

 

6,857

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

3,089

 

 

 

2,174

 

 

 

9,914

 

 

 

6,621

 

Operating profit (loss)

 

 

(3,903 )

 

 

(1,030 )

 

 

(9,642 )

 

 

236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income, net

 

 

6,371

 

 

 

4

 

 

 

8,061

 

 

 

6

 

Interest expense, net

 

 

(46 )

 

 

(62 )

 

 

(161 )

 

 

(103 )

Income (loss) from operations before income taxes

 

 

2,422

 

 

 

(1,088 )

 

 

(1,742 )

 

 

139

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for federal and state income taxes

 

 

21

 

 

 

22

 

 

 

67

 

 

 

80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

2,401

 

 

 

(1,110 )

 

 

(1,809 )

 

 

59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted income (loss) per common share:

 

$ 0.07

 

 

$ (0.04 )

 

$ (0.06 )

 

$ 0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average shares used in computing income (loss) per share:

 

 

35,159

 

 

 

27,507

 

 

 

30,776

 

 

 

27,529

 

 

 
4

 

  

ENGlobal Corporation

Condensed Consolidated Balance Sheets

(Unaudited)

(amounts in thousands, except share and per share amounts)

 

 

 

September 25,

2021

 

 

December 26,

2020

 

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash

 

$ 24,699

 

 

$ 13,706

 

Trade receivables, net of allowances of $1,673 and $386

 

 

5,310

 

 

 

7,789

 

Prepaid expenses and other current assets

 

 

217

 

 

 

891

 

Payroll taxes receivable

 

 

3,065

 

 

 

 

Contract assets

 

 

3,655

 

 

 

4,090

 

Total Current Assets

 

 

36,946

 

 

 

26,476

 

Property and equipment, net

 

 

1,117

 

 

 

1,263

 

Goodwill

 

 

720

 

 

 

720

 

Other assets

 

 

 

 

 

 

 

 

Right of use asset

 

 

3,179

 

 

 

1,628

 

Deposits and other assets

 

 

375

 

 

 

351

 

Total Other Assets

 

 

3,554

 

 

 

1,979

 

Total Assets

 

$ 42,337

 

 

$ 30,438

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$ 1,439

 

 

$ 2,138

 

Accrued compensation and benefits

 

 

1,963

 

 

 

3,048

 

Current portion of leases

 

 

1,126

 

 

 

1,541

 

Contract liabilities

 

 

664

 

 

 

1,258

 

Current portion of note

 

 

 

 

 

3,707

 

Current portion of deferred payroll tax

 

 

519

 

 

 

 

Other current liabilities

 

 

255

 

 

 

745

 

Total Current Liabilities

 

 

5,966

 

 

 

12,437

 

 

 

 

 

 

 

 

 

 

Deferred payroll tax

 

 

519

 

 

 

1,037

 

Long-term debt

 

 

1,377

 

 

 

2,733

 

Long-term leases

 

 

2,502

 

 

 

608

 

Total Liabilities

 

 

10,364

 

 

 

16,815

 

Commitments and Contingencies (Note 8)

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

Common stock - $0.001 par value; 75,000,000 shares authorized; 35,208,061 shares issued and outstanding at September 25, 2021 and 27,560,686 shares issued and outstanding at December 26, 2020

 

 

35

 

 

 

28

 

Additional paid-in capital

 

 

57,309

 

 

 

37,157

 

Accumulated deficit

 

 

(25,371 )

 

 

(23,562 )

Total Stockholders’ Equity

 

 

31,973

 

 

 

13,623

 

Total Liabilities and Stockholders’ Equity

 

$ 42,337

 

 

$ 30,438

 

 

 
5

 

  

ENGlobal Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(amounts in thousands)

 

 

For the Nine Months Ended

 

 

 

September 25,

2021

 

 

September 26,

2020

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

Net income (loss)

 

$ (1,809 )

 

$ 59

 

Adjustments to reconcile net income (loss) to net cash (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

355

 

 

 

313

 

Share-based compensation expense

 

 

166

 

 

 

177

 

Forgiveness of PPP Loan

 

 

(4,974 )

 

 

 

Changes in current assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable

 

 

2,479

 

 

 

(1,268 )

Contract assets

 

 

435

 

 

 

807

 

Other current assets

 

 

(2,415 )

 

 

620

 

Accounts payable

 

 

(699 )

 

 

(177 )

Accrued compensation and benefits

 

 

(1,085 )

 

 

883

 

Contract liabilities

 

 

(594 )

 

 

(2,706 )

Income taxes payable

 

 

(32 )

 

 

(76 )

Other current liabilities, net

 

 

(458 )

 

 

(361 )

Net cash used in operating activities

 

$ (8,631 )

 

$ (1,729 )

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Property and equipment acquired

 

 

(187 )

 

 

(228 )

Net cash used in investing activities

 

$ (187 )

 

$ (228 )

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Issuance of common stock, net

 

 

19,993

 

 

 

 

Payments on finance leases

 

 

(94 )

 

 

(64 )

Proceeds from PPP loan

 

 

 

 

 

4,937

 

Interest on PPP loan

 

 

25

 

 

 

 

Proceeds (payments) from revolving credit facility

 

 

(113 )

 

 

1,476

 

Net cash provided by financing activities

 

$ 19,811

 

 

$ 6,349

 

Net change in cash

 

 

10,993

 

 

 

4,392

 

Cash at beginning of period

 

 

13,706

 

 

 

8,307

 

Cash at end of period

 

$ 24,699

 

 

$ 12,699

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$ 155

 

 

$ 103

 

Right of use assets obtained in exchange for new operating lease liability

 

$ 2,613

 

 

$ 963

 

Cash paid during the period for income taxes (net of refunds)

 

$ 151

 

 

$ 16

 

Debt issuance costs

 

$

 

 

$ 140

 

Leased assets obtained in exchange for new finance lease liabilities

 

$

 

 

$ 219

 

Non-cash transaction: PPP loan forgiveness

 

$ 4,974

 

 

$

 

 

 
6

 

  

For further information on ENG's third quarter 2021 financial results, please refer to its Form 10-Q filing on the company's website at www.englobal.com, or on the SEC's website at www.sec.gov.

 

Conference Call

Management will host a conference call at 9:00 am Eastern time today to discuss the company's third quarter 2021 financial results, provide updates on potential contract awards, and discuss the company's growth outlook for the remainder of 2021.

 

To participate in the conference call, please dial in five to ten minutes before the call: (Toll Free) 888-506-0062 domestically, or 973-528-0011 internationally.

Entry code: 220367

 

The conference call will also be broadcast live over the Internet and can be accessed at: https://www.webcaster4.com/Webcast/Page/2272/43346

 

The teleconference replay will be available shortly after the completion of the live event through 9:00 am Eastern time on November 11, 2021. You may access the replay by dialing (Toll Free) 877-481-4010 domestically, or 919-882-2331 internationally, and referencing conference ID 43346.

 

You may also access the replay by visiting the company's web site:

https://www.englobal.com/about-eng/events-and-presentations/

 

About ENG

ENGlobal (NASDAQ:ENG) is a leading provider of complete project solutions for renewable and traditional energy throughout the United States and internationally. ENGlobal operates through two business segments: Commercial and Government Services. The Commercial segment provides engineering, design, fabrication, construction and integration of automated control systems as a complete packaged solution for our clients. The Government Services segment provides engineering, design, installation, operations, and maintenance of various government, public sector, and international facilities, specializing in turnkey automation and instrumentation systems for the U.S. Defense industry worldwide. Further information about the Company and its businesses is available at www.ENGlobal.com.

 

Safe Harbor for Forward-Looking Statements

The statements above regarding the Company's expectations, including those relating to its future results, operations and certain other matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws and are subject to risks and uncertainties. For a discussion of risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ENGlobal's filings with the Securities and Exchange Commission, including the Company's most recent reports on Form 10-K and 10-Q, and other SEC filings.

 

Click here to join our email list: https://www.englobal.com/investors/

 

 
7

 

 

CONTACT:

Market Makers - Investor Relations

Jimmy Caplan

512-329-9505

Email: jimmycaplan@me.com

 

Market Makers - Media Relations

Rick Eisenberg

212-496-6828

Email: eiscom@msn.com

 

 
8

 


The following information was filed by Englobal Corp (ENG) on Thursday, November 4, 2021 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Ticker: ENG
CIK: 933738
Form Type: 10-Q Quarterly Report
Accession Number: 0001568276-21-002035
Submitted to the SEC: Thu Nov 04 2021 1:05:54 PM EST
Accepted by the SEC: Thu Nov 04 2021
Period: Saturday, September 25, 2021
Industry: Engineering Services

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